ATO Interpretative Decision
ATO ID 2015/15
Superannuation
Superannuation guarantee: liability of liquidator for superannuation guarantee charge in respect of a Fair Entitlements Guarantee advance
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Issue
Does the Superannuation Guarantee (Administration) Act 1992 (SGAA) impose a liability on a liquidator to pay the superannuation guarantee charge (SGC) out of its own funds if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a Fair Entitlements Guarantee (FEG) advance the liquidator paid to a former employee of the company?
Decision
No. The SGAA does not impose a liability on a liquidator to pay the SGC out of its own funds if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a FEG advance the liquidator paid to a former employee of the company.
Facts
A company became insolvent and a liquidator was appointed.
The effect of the liquidation was the termination of the employment of an employee of the company.
At the date of liquidation, the company owed amounts to the employee for unpaid wages, unpaid annual leave and unpaid long service leave.
The company's employee made a claim with the Department of Employment for his entitlements for unpaid wages, unpaid annual and long service leave under the FEG. The FEG is a payment scheme designed to assist people who have lost their jobs as a result of their employer becoming bankrupt or entering into liquidation, and who are owed certain employee entitlements.
The employee's claim for FEG assistance was accepted by Department of Employment.
Department of Employment paid the FEG advance to the liquidator. After withholding PAYG tax from the advance, the liquidator forwarded the FEG advance to the employee but did not make superannuation contributions in respect of the unpaid wage component of the advance (the employee's ordinary time earnings), by the relevant quarterly cut-off date.
Reasons for Decision
Section 16 of the SGAA states that the SGC is payable by the employer. This obligation is generally not changed by the liquidation process. There is no provision in the SGAA imposing a personal liability upon a liquidator or other external administrator for payment of the SGC. Therefore, if the liquidator fails to make sufficient superannuation contributions by the relevant quarterly cut-off date in respect of a FEG advance the liquidator paid to a former employee of the company, the liability to the SGC remains with the company.
Note: The Fair Entitlements Guarantee (FEG) replaces the General Employee Entitlements and Redundancy Scheme (GEERS) from 5 December 2012. FEG is a scheme that provides assistance to employees who have lost their employment due to liquidation or bankruptcy of their employer and who are owed certain employee entitlements.
Date of decision: 24 March 2015Year of income: From 5 December 2012
Legislative References:
Superannuation Guarantee (Administration) Act 1992
section 16
The Act Related ATO Interpretative Decisions
ATO ID 2008/26
ATO ID 2015/13
ATO ID 2015/14
Keywords
Employees
Liquidation
Superannuation guarantee charge
ISSN: 1445-2782
| Date: | Version: | |
| You are here | 5 June 2015 | Original statement |
| 13 April 2017 | Archived |
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